It looks 100% nicer set on 1360x780 or what ever it is.
It really depends on your TV which resolution looks the best.
Your TV most likely has a native Resolution of 1366×768 which is not uncommon for HD Ready TVs and then it depends on who does a better job at scaling since the game always runs at 720p and either your TV or the 360 has to scale the image if you use a larger resolution than 1280x720.
If setting the game to 1366×768 looks better than 720p for you, then the 360 does a better job with upscaling than your TV but it can always be the other way around either on other TVs. I prefer to play in the native resolution. Really depends on your TV and everyone has to test for him/herself.